Enduring companies are built with fundamentals, not valuations
Silicon Valley has become obsessed with unicorns.
It’s a spectacular milestone. However, the term unicorn fails to capture whether a startup is a durable business or just a flashy valuation. Further, with more than 1,250 unicorns having raised over $750B of capital, unicorns are no longer as mythical as before.
Nevertheless, valuation is an important metric. It’s a lever — companies have to show progress, manage dilution, attract and retain talent, and generate press. But in today’s shifting global economy, where capital is accessible and valuations can deviate from a startup’s performance, we argue valuation alone is no longer sufficient in discussing the most exciting startups. The market conditions as of early 2022 have revealed the fate of many unicorns is uncertain.
What is a Gorilla — A startup with $1B+ valuation AND $100M+ net revenue run rate
In nature, gorillas are impressive creatures. The same is true in business, where a Gorilla is a startup that has (1) surpassed a valuation of $1B and is (2) generating an annual net revenue run rate above $100M. Most importantly, these startups are on track to becoming enduring, generationally defining businesses.
Including net revenue aims to balance the future potential of startups becoming enduring businesses, while still acknowledging they are early in their journeys. Furthermore, net revenue is a standardized metric that applies to any type of revenue — marketplace, SaaS, consumer, and other business models. Further, while profits may seem like a more obvious metric, almost all startups invest in growth and, as a result, rarely generate significant profits for many years.
With 1,250+ global unicorns, it’s safe to assume only a small fraction are Gorillas.
Whether the name becomes vernacular or not, a stronger focus on business fundamentals seems appropriate now more than ever.
Since our founding, Susa Ventures has been lucky to partner with three gorillas from the seed stage. Examples include Robinhood (leader in fintech), Flexport (leader in logistics and freight forwarding), and Newfront Insurance (leader in insurance brokerage).
Furthermore, our Gorilla ‘watch list’ includes Susa seed companies that may eclipse $100M in net revenue run rate in the next few years. These include existing Susa unicorns such as Stord, Viz.ai, Mux, Andela, Human Interest, and Mashgin.
We plan to keep this list updated.
Susa Ventures believes entrepreneurs are the lifeblood of progress. We exist to help founders build enduring businesses that can change the world. We call those businesses Gorillas, a hat tip to the incredible animals that inspired our firm’s name.